Michigan Health Care: A Strategic Assessment

Brian Peters

Senior Corporate Vice President

Michigan Health & Hospital Association

June 6, 2007

Transportation and Health Care

MHA Membership

146 charitable, nonprofit community hospitals (consolidation: down from over 200 in 1980s)

Small, rural facilities to large urban systems in every corner of state

Governed by volunteer board from communityOpen 24/7/365 to everyone, regardless of

ability to pay ($110 million in charity care and $440 million in bad debt in 2005)

MHA Membership

“Hospitals should be run more like business.”

- Alfred P. Sloan, 1955

Hospitals and Other Businesses

SimilaritiesHeavy government regulation (DCH, JCAHO,

CMS, NRC, etc.)Unionized labor force Exposure to liability (defensive medicine)Intense competition for market shareTrend towards mergers/systemization

Hospitals and Other Businesses

Differences Information gap: traditionally no “Consumers Report”

for hospitals/health care Existence of third-party (insurer) insulates “customer”

(patient) from true cost of care Different “customers” pay different rates, and many

don’t pay at all Key decision-maker (physician) is typically not

employed by hospital, and financial incentives are often misaligned between physician and hospital

CON law – supported by MHA, business, and labor

Michigan’s Political Climate

• Gov. Granholm re-elected

• Attorney General Cox re-elected

• Supreme Court: conservative majority maintained

• Senate

– Republicans control 21 to 17 (lost one seat)

– New Majority Leader: Mike Bishop (R-Rochester)

• House

– Democrats control 58 to 52

– New Speaker: Andy Dillon (D-Redford)

Michigan’s Economic Crisis

• Inflation-Adjusted General Fund Revenues Below 1972 Level

• FY07: $940M deficit

• Single business tax (SBT) eliminated effective

12/31/07: $2 Billion loss in general fund revenue

• FY08: $1.4B deficit even if SBT fully replaced

Michigan’s Economic Crisis

• Inflation-Adjusted General Fund Revenues Below 1972 Level

• FY07: $940M deficit

• Single business tax (SBT) eliminated effective

12/31/07: $2 Billion loss in general fund revenue

• FY08: $1.4B deficit even if SBT fully replaced

• What do we want to be when we grow up?

Health Care: An Economic Engine

• Health care is the largest employment sector in Michigan

– 496,000 direct jobs

– 261,000 indirect and induced jobs

– $33.1 billion in wages, salaries, benefits

• Vision: Michigan as a world-class destination for health care

• A healthier workforce = lower health care costs = enhanced job creation/retention

Health Care: An Economic Engine

www.economicimpact.org

Health Care: An Economic Engine

www.mha.org

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Moore’s Law:Computer performance doublesevery 18 months.

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Metcalfe’s Law:The value of networks rises bythe square of the power of allcomputers attached to them.

Source: Gordon Moore, 1965 Bob Metcalfe, 1993

Powerful Change…….

The Results:

Telemedicine / Remote Robotic SurgeryNanotechnologyDrug DesignDigital SensorsMedical Tourism

Massive impact on size/scope of health care workforce

Medical Tourism

Coronary Angioplasty

$3,700

$35,000

Medical Tourism

Quality of Care

Vision:Michigan hospitals will lead the nation in patient safety and quality improvement practices.

Mission:The MHA Keystone Center for Patient Safety & Quality will expedite the translation of patient safety and quality evidence into practice.

Quality of Care

Keystone Partners:

•BCBSM $6 million grant (June 2006)

Quality of Care

MHA Keystone: ICU (March 2004-December 2005):• More than 1,700 lives saved• More than 84,000 excess hospital days avoided• More than $188 million saved

Quality of Care

Keystone Collaboratives:

•Intensive Care Unit (ICU)•Gift of Life (organ donation)•Hospital-Associated Infection •Stroke•Surgery (May 16 launch)•Emergency Department (in due diligence)•Obstetrics (in due diligence)

Community Health Improvement

Baseline survey of Michigan employers and individuals 10/06 telephone survey: 150 employers; 603 individuals “Low-hanging fruit” = support for wellness programs,

but low adoption rate Prevention & Wellness DVD

Detroit Chamber, Daimler-Chrysler, Pitney Bowes, Dow Chemical, others

Highlights success stories, provides resources for employers

Community Health Improvement

MHA Campaign for Smoke-Free Hospitals

Goal: 100% smoke-free campuses by January 1, 2008Create health care cost savings and improve quality of

care “Lead by Example” = reducing Michigan’s high smoking

rate is single most important public health issue

Community Health Improvement25% of hospitals have smoke-free campus today

50% of hospitals have committed to smoke-free campus by 1/1/08 deadline

25% actively investigating

Michigan Health Care: A Strategic Assessment

Brian Peters

Senior Corporate Vice President

Michigan Health & Hospital Association

June 6, 2007